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Rite Aid whistleblower awarded $500,000

Rite Aid Corp. agreed to pay $3 million to settle claims it used gift cards to entice Medicare and Medicaid beneficiaries to transfer their prescriptions to its pharmacies.

The settlement resolved allegations filed by independent pharmacist Jack Chin under the qui tam, or whistleblower provisions, of the False Claims Act. The FCA authorizes private parties to sue for fraud on behalf of the United States and share in the recovery.

Chin’s portion of the settlement was $508,300, the DOJ said.

In 2012, Chin was awarded nearly $1.3 million as part of a government settlement with Walgreens. The drug store chain paid $7.9 million to settle False Claims Act allegations that it illegally gave $25 gift cards to government supported customers for transferring their prescriptions from another pharmacy, the DOJ said.

From 2008 to 2010, Rite Aid “knowingly and improperly” influenced the decisions of Medicare and Medicaid beneficiaries to transfer their prescriptions by offering them gift cards, the DOJ said.

“Pharmacies are not allowed to improperly influence the decision-making of Medicare and Medicaid patients about where to fill prescriptions,” according to Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). 

“Pharmacy chains that manipulate patient choices in this way will be held accountable,” he said.

Since January 2009, the DOJ has recovered more than $23.2 billion through False Claims Act cases.

From January 2009 to the end of fiscal year 2014, the government had paid whistleblower awards of $2.47 billion under the False Claims Act, including $435 milion during the fiscal year that ended September 30.

Rite Aid Corporation trades on the NYSE under the symbol RAD.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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